Manufacturing

Planning and Control

MPC 6th Edition
Chapter 5

McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Master Production
Scheduling
An effective Master Production
Schedule (MPS) provides the basis
for making good use of
manufacturing resources, making
customer delivery promises,
resolving trade-offs between sales
and manufacturing, and attaining
the firms strategic objectives, as
reflected in the Sales and
Operations Plan.
5-2

Agenda

5-3

Master Production Scheduling

and the Manufacturing
Planning and Control System
The MPS is a statement of the specific
products that make up manufacturing output
The MPS is a translation of the sales and
operations plan into producible products with
their timing and quantities determined
The MPS shows when products will be
available in the future

5-4

Attributes of the Master

Production Schedule

The MPS is a statement of production, not of demand

The MPS is not a forecast
The MPS considers factors such as capacity constraints,
costs of production, resource limitations, and the sales
and operations plan
The MPS is stated in terms of product specifications
usually part numbers which have specific bills of materials
(BOM)
In assemble-to-order environments, the MPS may be
stated in terms of an average final product
5-5

MPS and the Business

Environment
In a make-to-stock company, the MPS is a
statement of how much of each end item to be
produced and when it will be available
In a make-to-order (or engineer-to-order) firm, the
MPS is usually defined as the specific end item(s)
that make up an actual customer order
In an assemble-to-order firm, the large number of
possible product combinations is represented with
a planning bill of materials

5-6

Resource
planning
Rough-cut capacity
planning

Sales and operations

planning
Master production
scheduling

Detailed material
planning

Demand
management

Front End
Engine

Enterprise Resource Planning (ERP) System

MPS in the MPC System

5-7

MPS Algorithm
Aggregate production plan
Change production
plan?

Master production
schedule
Change requirements?
Change capacity?

Material requirements plan

Change master
production schedule?

Detail capacity plan

No

Realistic

Is capacity
plan being
met?

Is execution
meeting the
plan?

Yes
Execute capacity plans
Execute material plans

5-8

Disaggregation of Aggregate Plan

to Master Production Schedule
Month

January

Demand forecast
according to Aggregate
Plan for electrical motors
Week

February

1,500
1

1,200
4

MPS: (quantity for

specific end items)
240 watt
150 watt
75 watt

100

100
500

100
500

300

100
450

450
100
5-9

Master Production
Scheduling Linkages
The MPS is the driver of all detailed
manufacturing activities need to meet output
objectives
The MPS is the basis for key inter-functional
trade-offs

Production

and sales

Financial budgets should be integrated with

MPS activities
5-10

Master Production Scheduling

Process and Techniques

5-11

Time-Phased Record

A means of gathering and displaying critical

scheduling information (Forecast, available
stock, production schedule)
Period
On hand 1

10

15

25

30

32

32

27

10

10

10

10

10

Forecast
Projected available balance
Master production schedule

20

5-12

MPS Processwith Lot Sizing

Order size driven by
lot sizing constraint,
order timing/quantity
driven by safety stock
constraint

Period 1 5 plan

Period
On hand

Forecast
Projected available balance

20

10

15

15

10

32

22

Master production schedule

As time progresses,
new information
becomes available

Updated forecast for

periods 2 6 changes
projected available
balancing, prompting
rescheduling

30

hand
stockstock
=
Lot sizeOn
= 30
Safety
=5
On hand actual demand + production
= (20 + 0 10)
Period 2 6 plan

Period
On hand

Forecast
Projected available balance

10

Master production schedule

20

20

20

15

20

-10

-20

-35

-55

30

Lot size = 30 Safety stock = 5

5-13

Revising the MPS

Period 2 6 plan

Period
On hand

Forecast
Projected available balance

10

Master production schedule

20

20

20

15

20

20

30

10

25

30

30

30

Lot size = 30 Safety stock = 5

Additional production
orders in periods 2 and
5 to meet safety stock
requirements
5-14

Available-to-Promise
When immediate delivery is not expected (or
is not possible due to stockouts), a promised
delivery date must be established
The order promising task is to determine
when the shipment can be made
Available-to-promise (ATP) procedures
coordinate order promising with production
schedules

5-15

Available-to-Promise Logic
Discrete

Discrete ATP treats each period independently

Period 1: Total
customer demand
before next
production On
= 8hand
units

Forecast

Period
Orders 1: Projected
available = Previous
Projected +
available
available
MPS balance
MAX(Forecast,
Orders)
Available-to-promise
Master production schedule

20

Period 3: Total
customer demand
Period
before next
3 production
4
5 = 2 units

10

15

15

10

32

22

12

Period 1: ATP =
Lot size = 30 Safety stock = 5 available balance
customer orders =
20 -8

28
30 Period 3: ATP =

MPS customer
orders = 30 -2
5-16

Available-to-Promise Logic
Cumulative

Cumulative ATP carries ATP units forward

Period 1: Total
customer demand
before next
production On
= 8hand
units

Forecast

Period
Orders 1: Projected
available = Previous
Projected +
available
available
MPS balance
MAX(Forecast,
Orders)
Available-to-promise
Master production schedule

20

Period 3: Total
customer demand
Period
before next
3 production
4
5 = 2 units

10

15

15

10

32

22

12

Period 1: ATP1 =
Lot size = 30 Safety stock = 5 available balance
customer orders =
20 - 8

40
30 Period 3: ATP =
3

ATP1 + MPS
customer orders =
12+ 30 - 2

5-17

ATPConsuming the
Forecast

In the ATP calculation, demand is considered to

be the maximum of forecast and actual customer
orders
This

is a conservative approach
Assumes that we will eventually sell at least the
forecast quantity
Adjusts for periods where demand exceeds the
forecast
5-18

MPS in Assemble-to-Order
Environments
In an assemble-to-order (ATO) environment, the
possible combinations of end items can be huge
Specific end item bills of materials (BOM) are
replaced with a planning bill of materials, which
represents the potential product combinations
One type of planning BOM is the super bill,
which describes the usage of options and
components that make up the average product

5-19

Example: End item Bill of

Material BOM
Bicycle(1)
P/N 1000
Handle Bars (1)
P/N 1001

Frame Assembly (1)

P/N 1002

Wheels (2)
P/N 1003

Frame (1)
P/N 1004

5-20

Super Bill of Materials (Planning

Bill of Materials)
Mutually exclusive
option sets are listed
together, with a usage
probability for each
option

Parts used in
all
configurations
are listed with
usage
probability of
1.0

orbs
s
b
a
ock
t
s
l mi x
a
y
t
u
t
e
f
c
Sa
in a
s
n
o
i
t
varia

5-21

Available-to-Promise Logic
with Planning BOM
Are the common
parts on the BOM
available?

Common Parts
Available?

No

Yes
Is the requested
gear option
available?

Gear
Available?

No

Try 1 period
later

Yes
Is the requested
Taylor option
available?

Taylor
Available?

No

Yes
Book order
5-22

Two-Level Master
Production Schedules

When a planning BOM is used, a final assembly schedule

(FAS) is often used
States

the set of end products to be built over a time period

Two-level MPS coordinates component production and the

FAS
Component production is controlled by aggregate
production plan in the FAS
Final assembly is controlled by the FAS
Either discrete or cumulative ATP logic can apply

5-23

Discrete ATP with a Two-Level

Master Production Schedule
Taylor Brand 4-HP Tillers (FAS)

Period
On hand

Forecast for model (40% of total)

40

40

40

40

40

Orders

42

37

23

48

88

48

88

48

Available-to-promise

48

20

80

Master production schedule

80

80

80

Projected available balance

10

Normal ATP logic

applies to FAS
items

Lot size = 80 Safety stock = 10

Planning BOM
orders are the sum
of FAS orders
For planning BOM items
projected available
balance is always zero
because the item doesnt
actually exist

4-Horsepower Tillers (Aggregate)

Period
On hand

Production Plan

100

100

100

100

100

Orders

100

72

54

Available-to-promise

28

46

100

100

Master production schedule

100

100

100

100

100

Projected available balance

Safety stock = 0
5-24

Master Production Schedule

Stability

A stable MPS translates to stable

component schedules
Stability

allows improved plant performance

Excessive MPS changes can lead to

reduced productivity
Failure to change the MPS can lead to
reduced customer service and increased
inventory (failure to react)

5-25

Freezing the Master

Production Schedule
Demand Time
Fence

Planning Time
Fence

Inside the frozen

horizon no order
changes are allowed

Only occasional changes

Minor changes

Most changes 5-26

Managing the Master

Production Schedule
To be controlled, the MPS must be realistic
People should only be held accountable for
attainable performance levels
Stability and buffering are important
The MPS must not be overstated

Sum

of the MPS should equal the

production plan

5-27

Principles
The MPS unit should reflect the business
environment and the companys chosen approach.
If a common ERP database is implemented, the
MPS function should use that data.
Regardless of the firms environment, effective
scheduling is facilitated by common systems, timephased processing, and MPS techniques.
Customer order processing should be closely linked
to MPS.

5-28

Principles
ATP information should be derived from the
MPS and provided to the sales department.
An FAS should be used to convert the
anticipated build schedule into the final build
schedule.
The master production scheduler should
ensure that the sum of the parts (the MPS) is
equal to the whole (the operations plan).

5-29

Quiz Chapter 5

The Master Production Schedule (MPS) shows when

products will physically be available to ship? (True or False)
In which environment is a planning bill-of-material (BOM)
most likely to be used?
Available-to-promise (ATP) is likely to be least useful in which
environment?
A Super Bill represents average usage of components in an
assemble-to-order environment? (True or False)
When the master production schedule (MPS) is frozen for
some period, changes to the plan within that period are
typically prohibited?
5-30